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IRS Releases New Projected 2019 Tax Rates, Brackets and More

Tax and Financial News

November 2018

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IRS Releases New Projected 2019 Tax Rates, Brackets and More

IRS Releases New Projected 2019 Tax Rates, Brackets and MoreBloomberg recently released projected tax rates, brackets and other numbers that apply to the 2019 tax year (the IRS will release the official numbers later this year). Note, these are NOT the numbers that apply to the 2018 taxes you file in 2019, but to the income and activity that occurs during the 2019 tax year that starts January 1, 2019.

A big part of the IRS’s consideration in formulating 2019 numbers is the inflation index. The Tax Cuts and Jobs Act (TCJA) replaced the normal Consumer Price Index with chained CPI. Chained CPI doesn’t simply measure the change in prices, it measures consumer responses to high prices, effectively creating a smaller inflation adjustment. In any case, inflation adjustments are a critical component (and often the main driver) in year-to-year tax bracket, exemptions and eligibility thresholds.

With an understanding of what underpins the 2019 adjustments (in addition to the impact of the new tax legislation), let’s look at the changes.

Tax Brackets

The increasing CPI means brackets are being pushed upward – albeit slightly – giving us these projected tax brackets for 2019.

Individual Taxpayers
Taxable IncomeTax Due
$ - to $9,700 10% of Taxable Income
$9,701 to $39,475 $970 plus 12% of the amount over $ 9,700
$39,476 to $ 84,200 $4,543 plus 22% of the amount over $39,475
$84,201 to $160,725 $14,383 plus 24% of the amount over $84,200
$160,726 to $204,100 $32,749 plus 32% of the amount over $160,725
$204,101 to $510,300 $46,629 plus 35% of the amount over $204,100
$510,301 and higher $153,799 plus 37% of the amount over $510,300
Married Filing Jointly
Taxable IncomeTax Due
$ - to $19,400 10% of Taxable Income
$19,401 to $78,950 $1,940 plus 12% of the amount over $19,400
$ 78,951 to $168,400 $9,086 plus 22% of the amount over $78,950
$168,401 to $321,450 $28,765 plus 24% of the amount over $168,400
$321,451 to $408,200 $65,497 plus 32% of the amount over $321,450
$408,201 to $612,350 $93,257 plus 35% of the amount over $408,200
$612,351 and higher $164,710 plus 37% of the amount over $612,350
Married Filing Separately
Taxable IncomeTax Due
$ - to $9,700 10% of Taxable Income
$9,701 to $39,475 $970 plus 12% of the amount over $ 9,700
$39,476 to $ 84,200 $4,543 plus 22% of the amount over $39,475
$84,201 to $160,725 $14,383 plus 24% of the amount over $84,200
$160,726 to $204,100 $32,749 plus 32% of the amount over $160,725
$204,101 to $306,175 $46,629 plus 35% of the amount over $204,100
$306,175 and higher $82,355 plus 37% of the amount over $306,175
Head of Household
Taxable IncomeTax Due
$ - to $13,850 10% of Taxable Income
$13,851 to $52,850 $1,385 plus 12% of the amount over $13,850
$52,851 to $84,200 $6,065 plus 22% of the amount over $52,850
$84,201 to $160,700 $12,962 plus 24% of the amount over $84,200
$160,701 to $204,100 $31,322 plus 32% of the amount over $160,700
$204,101 to $510,300 $45,210 plus 35% of the amount over $204,100
$510,301 and higher $152,380 plus 37% of the amount over $510,300
Trusts & Estates
Taxable IncomeTax Due
$ - to $2,600 10% of Taxable Income
$2,601 to $9,300 $260 plus 12% of the amount over $2,600
$9,301 to $12,750 $1,868 plus 22% of the amount over $9,300
$12,751 and higher $3,076 plus 37% of the amount over $12,750

Personal Exemption Amounts

Personal exemptions are eliminated under the TCJA, so there is no adjustment any longer. The deduction for a qualifying relative is a similar type of item to the personal exemptions and is expected to be between $4,150 and $4,200 for 2019.

Standard Deduction

Standard Deductions
Filing StatusStandard Deduction Amount
Single $12,200
Married Filing Jointly & Surving Spouse $24,400
Married Filing Separately $12,200
Head of Household $18,350

In combination with eliminating personal exemptions, the TCJA approximately doubled the standard deduction for most taxpayers in 2018. With inflation figures where they currently stand, projections are as follows for 2019:

Certain taxpayers receive additional standard deductions; for example, the aged (65 or older) or the blind will be $1,300 in 2019 for married filing jointly and $1,650 if neither married nor a surviving spouse.

Capital Gains

There is no change in capital gains rates for 2019; break points between brackets do change, with the maximum zero and 15 percent rate amounts as follows: 

Capital Gains
Filing StatusMaximum Zero AmountsMaximum 15% Rate Amount
Single $39,350 $434,550
Married Filing Jointly & Surving Spouse $78,750 $488,850
Married Filing Separately $9,350 $244,400
Head of Household $52,750 $461,700
Trusts & Estates $2,650 $12,950

Section 199A Deduction (aka the Pass-Through Deduction)

Under the TCJA, sole proprietors and owners of pass-through entities are allowed up to a 20 percent deduction on qualified business income. To qualify for the deduction, a certain threshold must be met, and phased-in limitations are applicable. They are projected to be as follows for 2019:

Section 199A Deduction (aka the Pass-Through Deduction)
Filing StatusThreshold AmountPhased-In Amount
Married Filing Jointly $321,450 $421,450
Married Filing Separately $160,725 $210,725
All Other Taxpayers $160,700 $210,700

Alternative Minimum Tax (AMT)

AMT exemptions are also subject to adjustment for inflation and are projected to be as follows:

Alternative Minimum Tax (AMT) Exemptions
Filing StatusExemption Amount
Single $71,700
Married Filing Jointly & Surving Spouse $111,700
Married Filing Separately $55,850
Trusts & Estates $25,000

Don’t forget, these are only projected changes. The IRS will release the official numbers later this year.

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These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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